Aliko Dangote’s cement company to engage investors in new $364.4-million debt facility

Africa’s largest cement producer Dangote Cement has established a new N150-billion ($364.4 million) commercial paper program. The issuance reflects its continued interest in engaging fixed-income investors as the company takes advantage of the low-interest-rate environment on the Nigerian capital market.

The commercial paper combines with the company’s N300-billion ($728.8 million) multi-instrument issuance bond program. The proceeds will be used for working capital and general corporate purposes.

The new short-term debt facility, which increases Dangote Cement’s access to capital market funding, will help the cement behemoth broaden its funding sources.

The move will also allow it to take advantage of the low-interest environment on Nigeria’s capital market.

The N150-billion ($364.4 million) paper is expected to reduce the company’s operating expenses as it rolls over short-term debt facilities with higher interest rates with new facilities with lower rates.

Dangote Cement CEO Michel Puchercos said the new commercial paper confirms its ambition to maintain its long-term and successful track record accessing the Nigerian debt capital market.

He noted that Dangote Cement has issued an aggregate of N450 billion ($1.09 billion) in commercial papers since 2018, and that it will continue to engage fixed-income investors through its funding program.

Commercial paper is a money-market security issued by large corporations to obtain funds to meet their short-term obligations and operating expenses.

The paper is backed only by the issuing company’s promise to pay the face amount on the maturity date specified on the note.

Aside from being the largest company on the Nigerian Exchange and the biggest cement company in Africa, Dangote Cement is famed for issuing the largest commercial paper in Nigeria’s debt capital market.

The cement behemoth, majority owned by Africa’s richest man, Aliko Dangote, recently listed three tranches of N50-billion ($122 million) bonds under its N300-billion ($731 million) debt issuance program on the Nigerian bourse.

GCR (Global Credit Ratings) Ratings rated Dangote Cement a national-scale long-term and short-term issuer ratings of AAA(NG) and A1+(NG), respectively, with the outlook accorded as “Stable.”

The company’s long- and short-term ratings are the highest possible on the GCR rating scale. This further highlights its competitive position as Africa’s leading integrated cement manufacturer given its strong earnings, robust cash flows and solid gearing metrics.